market (35)

What Do You Do To Keep Your Agents Motivated? 

During the early part of the roaring 2000s our office was a selling machine.  Of course, most offices were like that, but when the market began to slide into ar130581085721834.jpgrecession things slowed down.  Our broker, who was a great guy, was managing two offices.  He spent the majority of his time at the other office in a large metropolitan city (approximately 29 out of 30 days).  As the recession became more and more severe our office began to drop sales and agents.

 

The worse things got with the economy the worse sales got with the office.  ar130581036786684.jpgOur broker was seldom around to encourage and inspire the office, and the agents found little enthusiasm and motivation to overcome the economic struggle the country was entering into.  Finally, a year ago that office closed.  It really was the right thing to do.  Most ar13058103352391.jpgagents were doing little to nothing by that time.  In our former broker's defense a dozen or more offices have closed in the area.  So, it wasn't specific to our location.

 

There were a few of us who were highly self-motivated who simply moved on.  I actually joined that company because I was very self-motivated, and I didn't need the broker looking over my shoulder all the time.  I also didn't need weekly pep rallies to keep listing and selling homes.  I love the job.  When the office closed I started my own company and it's doing well, but my questions for you are,

 

"What do you, or what does your office do during hard times to keep your agents ar13058115079416.jpgmotivated and on track?  What keeps the agents excited when it becomes a real challenge to succeed in their profession?  How do you deal with the agents who need that extra boost to stay steady during slow time?"

 
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I have been hearing more and more objections from my buyers about purchasing a home TODAY because they keep hearing that the market is going to decline further, so they don't want to be in a negative equity situation. In addition, they have heard that there is going to be a "mad rush" of foreclosure properties soon, so maybe they should wait...

I wanted to start this discussion in hopes that we can all help each other handle this objection so we can all be more successful!

I have been handling it this way; Well, Mr. Buyer that may happen, however, even if you waited to purchase a home that was 5% lower in price, you may end up paying more if the interest rates increase. They are bound to increase in the near future, so do you want to take that chance?

Just some thoughts and I would love to hear your opinions...

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I woke up this morning and started looking over all of my favorite business news websites and I saw that the headlines for today was something like…..,

“Economic Growth at a Standstill, Revised Government reports 2nd Quarter Growth Down Sharply”

I get asked often, “who is your business” because, people want to know, is housing recovering. My reply to this question is normally,

“The worse the economy gets, the better my business. I am Bentley shopping have you seen the new Bentley Continental GT?”

Everyone laughs in nervous anticipation thinking I was joking and that any minute now I am going to say something to diffuse the un-comfortableness floating in the air like a lead balloon but, I don’t. My point with my reply is, the economy isn’t growing, it’s not even set to grow. In fact, the economy is actually set to fail and fail big. People are amazed or even combatively when I say these things, it’s almost as if they are walking around in a drug educed stupor with the thought bubble floating over their head that reads something like,

“YES, WE CAN” or “HOPE” and even better, “CHANGE”

The economy reminds me of that scene in the movie Constantine where Keanu Reeve’s character “John Constantine” has a face to face encounter with the angel Gabriel who want’s to make the human race earn the love of God by hastening the coming of Satan’s son. Gabriel explains her madness by elaborating that the human races is capable of such incredible triumphs but, through her years of observing us, she realizes that we only change when we are on the event horizon of total destruction or despair. She goes on further to say, she will bring further our destructions so that we can rise to the occasion and be found worthy of God’s love and grace.

Yes, it’s a sick, crazy understanding of human nature but, what could we ever expect from a being (an angel) who has felt as a 2nd class race for eternity? You need to understand the concept from Gabriel’s point of view. She knows, God has put her and her race as 2nd, in behind humans which in her eyes have done nothing but, thrown Gods incredible grace back in his face whereas, she and the other angels have served and will serve for eternity without such love or forgiveness.

In many ways, this battle that Gabriel struggles with, in the movie, is suppose to be a reflection of the concept of communal grace or collective salvation and manifest destiny.

In other words, Gabriel can’t be saved from these wretched horrible, less than desirable position behind humans unless everyone can be saved and she believes it’s God’s will and that she is doing God’s work and come hell or high water, she is going to make it happen.

Now, let me ask you, do you believe this theology could be present in our current Government leadership?

Yeah, I know….the movie analogy is a bit fanciful and maybe a bit ridiculous but, it’s a good analogy none the less.

Is it possible that our Government is being lead to bring forth fundamental change in the way of transforming our country into a socialist utopia where Government knows best. Is it possible that some in our Government feel it’s their destiny to make these changes and they are doing a good work by following what they believe is God’s will for their lives? Is it possible that some in our Government are working towards this transformation by creating a environment of total destruction so that they can rise up as our saviors and cleanse us of this evil capitalism that we suffer from?

Here is what I know. I know that Franklin Roosevelt announced in a radio program that he believed in a 2nd Bill of Rights, of which, this administration has succeeded in accomplishing a few of those items.

The specific right I want to focus on is “The right of every family to a decent home.”

2nd Bill of Right # 2: The right of every family to a decent home;

Once again, the politicians realized you can’t just give people a home but, you can collapse the housing industry and everyone who has a home and paying a mortgage can keep their homes regardless if they pay or not because, the government can raise taxes, create bailouts or take over banks and simply cancel out the homeowner’s debt at the expensive of the tax payer.

Let’s be clear, the Progressive agenda to move away from our constitution or to transform our constitution has been in the works for a long time. With the Progressive control of the White House and both houses of Government, we are simply seeing a fast forwarding of their agenda.

Make no mistake, you can’t have a housing recovery without jobs and from my point of view, this Government hasn’t done anything to increase jobs. In my opinion, they have done what they can to kill jobs and that leaves me with a question…………..why.

The next time your asked about your business, the next time someone ask you when you think we will recover from this economic crisis I hope you remember this blog, I hope you ask yourself do you really know what is happening in our Government that will forever impact our industry and how we do business.

This isn’t a Republican vs. Democrat argument, this is a Constitution vs. Progressive argument of which, both go to the core beliefs that you may have about this divinely inspired country.

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foreclosure2.jpg
There's a lot of chatter on real estate blogs about the steep increase in foreclosures and short sales in Palo Alto. Unfortunately many sites post stats from a company called Realty Trac which tracts everything from a Notice of Default through a listed bank owned property. Many things can happen before a home with a Notice of Default actually gets to be sold by the bank, but unless you read the fine print carefully it is easy to confuse a house that is behind a few months in payments with an actual bank owned property on the market for sale.
 
Most bank owned homes as well as short sales (where the seller owes more than the home is worth and the lender/lenders have agreed to accept less than the amount of the mortgage to release the debt) are sold through the MLS. So to see how many of these distressed sales have hit the market in the last year I went to the MLS and looked.
 
Here is what I found for single family homes:
 
Bank owned properties sold in last year: 4
Current Pending sales of Bank owned: 2
Short Sales sold in last year: 3
Current Pending Short Sales 1
Current Active Short Sales 1
 
For condo/townhomes the numbers are:
Bank owned sold: 2
Bank owned pending sales: 1
Short Sales sold: 3
Short sales pending: 4
Short sales active: 2
 
As you can see this is not a huge number, especially since the total number of homes sold in Palo Alto in the last year is 369, making distressed sales account for less than 2%. There have been 97 condo/townhomes sold in the same period making the distressed sales about 5% of that market. These numbers are not enough to have any impact on the price of homes in Palo Alto at this point. The percentage would have to increase several fold before Palo Alto prices are affected by distressed properties. I am not saying that this is or is not going to happen, that is a discussion for a future post, just that it has not happened yet.
 
Marcy Moyer
Keller Williams Realty
D.R.E. 01191194
*Photo Credit: found this hilarious picture at the website for The Sacramento Bee.
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There's a lot of chatter on real estate blogs about the steep increase in foreclosures and short sales in Palo Alto.Unfortunately many sites post stats from a company called Realty Trac which tracts everything from a Notice of Default through a listed bank owned property.  Many things can happen before a home with a Notice of Default actually gets to be sold by the bank, but unless you read the fine print carefully it is easy to confuse a house that is behind a few months in payments with an actual bank owned property on the market for sale.
 
Most bank owned homes as well as short sales (where the seller owes more than the home is worth and the lender/lenders have agreed to accept less than the amount of the mortgage to release the debt) are sold through the MLS.  So to see how many of these distressed sales have hit the market in the last year I went to the MLS and looked.  
 
Here is what I found for single family homes:
 
Bank owned properties sold in last year:             4
Current Pending sales of Bank owned:                2
Short Sales sold in last year:                             3
Current Pending Short Sales                              1
Current Active Short Sales                                 1
For condo/townhomes the numbers are:
Bank owned sold:                                             2
Bank owned pending sales:                               1
Short Sales sold:                                              3
Short sales pending:                                         4
Short sales active:                                            2
As you can see this is not a huge number, especially since the total number of homes sold in Palo Alto in the last year is 369, making distressed sales account for less than 2%.  There have been 97 condo/townhomes sold in the same period making the distressed sales about 5% of that market.  These numbers are not enough to have any impact on the price of homes in Palo Alto at this point.  The percentage would have to increase several fold before Palo Alto prices are affected by distressed properties.  I am not saying that this is or is not going to happen, that is a discussion for a future post, just that it has not happened yet.
Marcy Moyer
Keller Williams Realty
D.R.E.  01191194

 

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As a current member of a Commercial real estate team and an eight year background in Residential real estate...I wonder how the world of REO is going to effect agents who are currently specialize in Residential REO's, but want to venture into the Commercial side of REO.

Do residential agents want the commercial REO's? And if so, are they getting listings from their asset managers?

If residential agents don't want the commercial REO's - where and/or who are those listings going to.

Do assest managers believe that residential agents have the knowledge to sell commercial properties? And do most asset managers have residential and commercial portfolios?

Is there a market for agents that do both residential and commercial? Or is it more effective to have a specialty within one or the other?

Does anybody think teaming up a residential agent with a commercial agent will be a proactive and profitable move for future REO business?

There are so many more questions and comments to make regarding this scenario that I can't mention all of them at this time. We are in a volatile and daily changing market that predicting the future based on history seems futile.






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I haven't taken a buyer out in months. I have been concentrating on Short Sale Listings. But, I had an open house recently in order to attract some buyers for one of my listings. Suddenly, I acquired two buyers who didn't even know if they qualified for a loan. They both wanted to see homes that included a pool, views, and acreage, for no more than $100,000.

Now....it all came back to me. I was so busy early last year running around with buyers, getting them pre-approved, writing multiple offers until midnight, searching the MLS, calling listing agents begging for information so I could write a winning offer. No wonder I got burnt out.

But this time it was different. There are almost no REOs for sale; mostly Short Sales. And with those Short Sales the listing agents actually called me back with a variety of stories such as "the buyer just walked", "the buyer didn't qualify" please submit an offer. Which brings me back to my Open House. For some reason, I wasn't getting any interest in this listing that would have sold in 5 hours last year. That feeding frenzy seems to be gone. Maybe buyers are still avoiding Short Sales, maybe they too are burnt out putting in offer after offer only to get their credit ruined after so many "cross-qualifying" credit inquires.

It could be just a weird month in Southern California, a fluke, but anyway I am putting in two offers tomorrow. One on a STANDARD SALE....unheard of in this area. The other on a Short Sale that has no other offers. Maybe I'll be doing more Open Houses.
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I just received this in my email...Dear Vendor,As many are aware and have brought to our attention, it has become difficult in several areas to accept orders that have been sent out to numerous agents at once. We have received input from several agents regarding the use of auto-accepting/refreshing software to automatically accept orders and have addressed it accordingly.In an effort to eliminate any unfair advantage produced by utilizing these so called auto-accepting programs we are introducing a new process to accept orders. The acceptance process will be relatively the same as before however the system will now prompt you to enter a validation code prior to accepting an order. This is known as a CAPTCHA.A CAPTCHA is a program that protects websites against automated bots by generating and grading tests that humans can pass but current computer programs cannot. For example, humans can read distorted text as the one shown below, but current computer programs can't:This process will only be performed once per order just prior to accepting. If selecting multiple orders from the Ordered worklist to accept at a single time, the CAPTCHA is only required once for the batch (not for each individual order).In the event that you’re unable to read the words provided in the CAPTCHA you can click the link below the word box (Get another CAPTCHA) to get a different verification phrase.This process is planned to go into effect on Sunday, 1/31/2010.I commend M2M for doing this and hopefully agents will get their fair chance at their BPO. I for one have been a losing agent to acceptance in with this company. I even have my email forwarded as text to my mobile phone and SMS messages but still was too late in accepting any assignments.This time, It's a fair free-for-all game. I'm all for it.
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What will 2010 Bring for Portland Oregon?

Okay kid’s here’s the skinny. 2010 What will it bring? If you are looking to make a move in Real Estate in the Portland Metro Market you are probably in what I would consider your perfect window. Price’s are going to continue to creep down as Seller’s compete against REO and Short Sales for Buyer’s.Interest Rates today are amazing. Under 5%, with good credit! Rates are probably as low as they are going to get because it wouldn’t be profitable to the lender’s to go any cheaper. Looking around I see the price of gas going up and we should be at $3 a gallon shortly. To me, that says inflation. Inflation says to the FED that they need to raise the Prime Rate in order to control it. It’s not their only tool but at some point lending at 1/4 % will end. Now, this is something that they do not want to do, but at some point in 2010 they will have to. Once this occurs and your rates go up, the buying power that is available today will decrease. There’s really only one reaction that can occur; prices will get pushed down again.I know that no one wants to hear that housing values are going to continue to fall, but unless people get pay raises in conjunction with the upcoming interest rate increases, the Buyer’s buying power will decrease. For example; if you can afford a $1,500 mortgage PITI, and the rates go up, you can’t afford more you just have to buy a cheaper house. For example at 5% interest $10,000 borrowed will cost you approximately 5.02. If interest rates are at 6% and now that $10,000 cost you $6.27. You still make what you make so your buying power is weakened. If you’re a Seller and the Buyer’s have been pushed out of your price range what are you going to do? Lower the price down to where the Buyer’s can again afford your home. So, I think that prices will continue to get pushed down some more. I just don’t see a different solution, but nothing would please me more than to be wrong.I’ve said a mouthful let's get some feedback and help us all have a better 2010. How hard could that be? ;0P
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Chase Finds 16% of Mods Are 'Permanent’?

Chase Finds 16% of Mods Are 'Permanent’?A recent article highlights that JPMorgan Chase has over 140,000 borrowers in the HAMP program currently, and that only 16% will be or have been approved for “permanent” modification as they announced in Congress. Additionally only 29% of those made all of their payments on time during their 3 month trial and so now are ineligible for permanent mods. Begging the question, so is even the 16% number accurate?This along with other examples of the fallacy of HAMP I have given in the past conjures memories of an advertisement from my youth… “Where’s the Beef”?HAMP sounds nice, People love acronyms, best intentions and all but like so many things in our society these days no one wants to look beyond the surface. We long to be placated. We want to feel better, eat our government endorsed Hostess products and watch dancing with the stars until our Ambien kicks in. All you are required to do is look at two factors to determine HAMP was NEVER going to work as it is currently configured.1. Out of control unemployment. The numbers are staggering and nowhere close to reality when one factors the numbers of people still employed but on reduced hours, or those that have fallen of the unemployment rolls entirely. You can’t qualify if you have no, or even reduced income.2. The amount of mortgages that are upside down more than 10-20% allowable. Borrowers in California, Florida, Arizona and Nevada are doomed even before they announced the program.In all actuality the servicers are making only a half hearted effort in these programs. The lenders know their hands are tied, Congress and the Administration know this as well. The only ones who don’t? John and Sally Homeowner in Eugene Oregon who actually need and think they are going to get a mod. Adding more fuel to the noxious mix of those who know, the vultures who prey on John and Sally. Telling them their lender will take too long, work with us and we will get you your mod…just give us $995. They believe this right up until me or someone like me shows up at the door with the sheriff. Julia Gordon from the Center for Responsible Lending said as much in her address to congress, saying that HAMP had the “theoretical potential” to help but servicers either would not or could not do what is asked of them.What to do? Do we as a nation bite the bullet and “bailout” the borrowers as well. Should we do a white board erase of all current mortgages and start over as some have suggested? Highly unlikely! Can you imagine the lawsuits generated by those who have previously been foreclosed on and are left to wonder “why was I not bailed out”?I am interested in this group’s insight. What would you propose? I have outlined my ideas here in prior blogs so I won’t beat that drum too loudly but these are the basics (how we create jobs is a blog post unto its own).1. Mod only those who can, and quickly. Release all other inventory on to the market regardless of how far values fall.2. Waive the 3 year restriction on all foreclosed or bankrupted borrowers and allow those that are TRULY qualified to re-enter the market.3. Lift restrictions on the amount of properties investors can purchase.What say you?
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Whats Next?

So…Where are we heading in this market? Countless moratoriums at the Federal and State level. Moratoriums from the banks themselves trying to work out loan mod’s. Local Judges refusing to evict homeowners., Local sheriff’s doing the same. Now we have programs like HAMP and Court decisions like National Bank v. Kesler. There is such an underpinning of resentment from the American people against not only the Banks but corporate America as well. Will this sentiment continue to stall the inevitable? I for one am of the opinion that the market must be allowed to run its course. Real estate is and always has been cyclical. Yes, this is one of the worst markets we have seen in decades but “this too shall pass”.There is a huge amount of shadow inventory the banks are holding. Release it. By all means, do loan mod’s for people who are able to, for people who were duped into loans they could not afford. Help those that we can but at the end of the day these loan mod’s are mere Band-Aids, just delaying the inevitable by a year or two. Put the homes that are foreclosed on the market. Foreclose on the homeowners that have no justifiable means to pay those notes and let the market work its way out. It will be ugly or uglier than it has already been…But we will see quicker return to normalcy. The Government would be better served by spending to create jobs so that MORE homeowners do not lose their homes.So, how do we repair it once it hits “Sea Level”?Keep interest rate levels low and keep the tax incentive for first time home buyers.Ease restrictions on investors purchasing multiple properties. (This is key to the rebuilding)Ease restrictions on homeowners who have had foreclosures and or BK’s to get back into the market.Create restrictions so Banks can no longer offer exotic loans (I hear new ARM programs are coming)There are many others but I would love to hear some other ideas.
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Another housing slump coming?

From MSN Money today. BofA and Wells Fargo have both been on the record stating that the "shadow inventory" does not exist. This is the third published report I have read that sates otherwise. As servicers continue to trickle product into the market there is a strong chance that this will prolong the housing slump for more than originally thought. The tsunami we have all heard about, while driving prices continually lower might rid the market of this distressed inventory faster and perhaps hasten a quicker recovery...Thoughts?Analysts say 7 million soon-to-be foreclosed properties have yet to hit the market.Posted by Elizabeth Strott on Thursday, September 24, 2009 8:59 AMAny optimists touting a housing recovery might want to pause and think about this: Amherst Securities Group analysts believe the market faces another major hurdle because about 7 million properties that are likely to be seized by lenders have yet to hit the market.The "huge shadow inventory" reflects mortgages already being foreclosed upon or now delinquent and likely to be and, assuming no other properties are on the market, it would take 1.35 years to sell this inventory based on the current pace of existing-home sales, analyst Laurie Goodman wrote in a note to clients.In 2005, there were 1.27 million properties in the same situation.There have been a number of recent economic reports hinting at a recovery for the housing market. In May and June, the S&P/Case-Shiller 20-city index of home prices rose, the first month-over-month increases in values since 2006. Prices for U.S. homes rose by 0.3% in July from June, the Federal Housing Finance Agency reported earlier this week."The favorable seasonals will disappear over the coming months, and the reality of a 7-million-unit housing overhang is likely to set in," the analysts said, according to Bloomberg News .Meanwhile, The Wall Street Journal reported on Wednesday that real-estate agents and analysts worry that when the shadow inventory is unleashed, it could cause a big bump in the road to recovery and add a new layer of difficulty for the housing market.Ivy Zelman, the chief executive of Zelman & Associates, a research firm based in Cleveland, believes 3 million to 4 million foreclosed homes will be put up for sale in the next few years. The question is whether the flow of these homes onto the market will resemble "a fire hose or a garden hose or a drip," she told the paper.
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Land Safe Appraisers (Countrywide) Killing Deals!!!

Okay,Can someone please shed some light on why land safe appraisers are killing sales with their values? A few years ago aren't these the same group of appraisers countrywide was using to do there loans? I have now had 2 deals go sideways because of values from appraisers (of which both have not been from the local area).As many experienced REO agents know the banks, our clients have an appraisal on file prior to ever listing the property. On one particular home my BPO price was conservative and below both the appraisal and 2nd agent's BPO. However after 4 days on the market this 4400 sq ft home, in what I would consider good condition, located near a golf course community had 3 offers. So we go to escrow with high offer and guess what the lender's appraisal came in 17K below purchase price and 30K below the banks appraisal on file. (If we had these same appraisers’ 2-3years ago we probably wouldn't be in such a mess now RIGHT!!!) At this rate our market will never recover...Looking at the appraisal the appraiser noted this home in average condition.. I'd beg to differ but, I'm not an appraiser. The most alarming thing is the adjustment for a property same age and style in good/superior condition. A $40,000 adjustment seems extreme to me for a home in which no repairs are noted, and was built within the last 5 years. Keep in mind, in the report the appraiser notes no needed repair or deferred maint; however subject property is in average condition. (I will upload pics in a few.) Any comments to help shed some light on this would be great. Has anyone else had similar experiences? I'm sure this deal will be as good as dead and countrywide now B of A can forget about ever writing the loan in this one because the bank is not going to take that hit, In fact they will lend on it before they allow that to happen.Here's my question. Are these the same appraisers countrywide have been using to price their REO's? If so this would explain why countywide is listing their REO's below everyone else and getting multiple offers. Well if this is the case why are they accepting offers over appraised value, better yet why are they lending on them since most countrywide REO are requiring one to be pre-approved with Countrywide? Comments Please..
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BPO tells Sad Tales of Woe

Back in November of last year, I did an exterior BPO on a rural property. When I do a BPO, I pretty much always do this: find "neighborhood" actives, "neighborhood" solds, and then comparable actives and solds that are ideally within a mile of the subject, but for these rural properties, the distance is often much greater than a mile.I put the "neighborhood" in quotes because out in the sticks like that, it's kind of hard to say where exactly the neighborhood is. In these cases, I generally use at least the nearest half-dozen listings or recently solds to comprise the "neighborhood."The other day, I got an interior BPO request. It turns out, I had done an exterior BPO for this property back in November of last year. This happens from time to time, and what I like to do is go back and look at what happened to the "active" listings I based my previous BPO on.In this case, there were ten listings in the "neighborhood." Of those 10, one sold. The rest all expired or got cancelled. Zoinks. And, the three "active" comparables I used formy BPO - two expired, one cancelled. Double zoinks.Let that be a lesson out there to all you sellers. Need to sell? Get aggressive. There's no time to waste in a market like this.
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BPO or “Broker Price Opinion” is the back bone of the REO (Real Estate Owned) industry. This is the tool that banks, lenders, investors and perhaps most importantly the asset managers use to determine the value of a property once they have taken it back at auction and again after it has been on the market for 90 or more days. For this article I will refer to all of these individuals / entities as “Asset Managers”, if that is OK.A BPO is typically tasked to two or more agents to submit their opinions. Having multiple reports, it is now possible for the asset managers to determine a realistic price to list a home for, when it is assigned to an REO Agent.If the values are out of skew, the asset managers will ask for clarifications and may order an additional BPO – just to get a good feel for the property. As a BPO agent, you are the eyes and ears of the lender. This is why this is such an important task in the REO process.TYPES OF BPO’SThere are three different types of reports that a BPO agent may be asked to perform. The first is a drive-by or exterior BPO. This requires a physical trip to the subject and an assessment of the property as well as the neighborhood. The second is an interior or full BPO. An Interior BPO requires that the BPO agent gain access to the interior of the property and make a full assessment based on the condition and amenities of the property. Finally there is a Valuation or desk-top BPO report. A Valuation is simply looking at the property on paper and determining what it should sell for, with all things being equal.Perhaps the most common BPO is the drive by, or Exterior BPO. The entire process should take about 2 hours. I know there are people out there telling you they knock them out in 30 minutes – well, unless you live in a city like New York and every one of your BPO’s is in the same building, then trust me, you will easily have a couple of hours invested – even after you have completed hundreds of them, as I have.The purpose of the BPO is to provide the Asset Manager with a fairly accurate estimate of the property’s value in the current market – which means today. The opinion is made from looking at comparable properties that have recently sold and are currently on the market. Adjustments are made for all the different reasons that separate one property from another. For example, an adjustment would be made for properties that are larger or smaller than the subject. Is the lot size bigger or smaller then the subject?Yes, there are many difference that are almost a ‘give me’ that shouldn’t need to be discussed, if you are an experienced REALTOR®. What makes you a trusted expert is when you can document, adjust and report for the more subtle differences between the subject and the comps. Is one of the properties on an exterior lot (meaning does it back to an exterior street – away from the tract)? Are there improvements that may go over looked, like RV access or perhaps a custom iron gate replacing wood fencing? If the subject and comp are from different tracts – do you document the differences, regardless of how similar they are?On an Interior BPO, you have to be aware of upgrades – are kitchen cabinets, Granite, Corian, White Tile or Formica? Are the cabinets upgraded? What type of tile is on the floor – 12” tile? 16” tile, 18” tile? 20 tile”? Is it Travertine? How many rooms is it in? Does the fireplace have a matching tile surround? Is the carpet an upgrade?What about damage? It is obvious if there are holes in the wall or malicious damage. Are there missing electrical switch plates of outlet covers? Are the ceiling fans or lights missing? Has the closet organizer been stripped, leaving an empty closet? Are all of the drawers in place, or were they used as moving boxes? Are all of the appliances there? Are the appliances’ an upgrade?These questions a local expert could answer. Can You? Do you include this level of detail in your BPO?PICTURESEvery BPO requires that you take digital pictures that can be uploaded – either through a website or perhaps an email. Today, I do not know of any companies that still require that pictures be sent through the snail mail – but it has not been so long ago when that was the norm.For a Drive-By BPO, you will generally be required to take 3 pictures as a minimum – the front of the subject, address verification and a street scene. However, many clients will want more and there is nothing more frustrating to miss a picture that a new client wants, because you were doing what you considered to be the ‘norm’.Every home that I take exterior pictures of I always start with the exterior of the home followed by two address verification shots and two street scenes. The minimum any BPO will require is one of each of these.I take the 2 address verifications, if possible from two different sources – just in case one picture does not turn out right. I’ll take the curb painted with the number or the mailbox, if it is at the street. Then I look for the number on the structure itself. Sometimes this can be a challenge – for example the numbers can be painted the same color as the house.When I take the exterior, I always use my zoom to have the house fill my view finder. My clients are not interested in looking at a band of black asphalt in front of the home that looks far away – they want to see the house and what condition it is in. They also use this picture to verify that you are taking pictures of the right house. (OK, I admit I have taken the wrong pictures more than once – but I’m not going into that here.)I’ll take a picture of the street, going in each direction. If the subject is on a corner, I’ll also get pictures of the side street as well as a corner shot of the subject.What you will learn is you can never take too many pictures – remember, they are digital; it’s not like you have to pay for developing. I will never submit all of the pictures I take – but I do use them. When I am taking pictures, I average 3 homes per trip. By the time I get back to loading then and completing my BPO, it is more than possible I can get homes confused with one another (heck, I can take pictures of the wrong house, so cut me some slack – I’m getting old).I do provide as many pictures as possible, giving the Asset Manager as clear an understanding of what the property looks like and it’s current condition.The other pictures that I will always take include at least one each of each side of the property. If I can gain access to the back yard, I’ll also get one of the back of the property as well as the back yard. Remember, these pictures will help me when I am writing my report and help me offer as accurate an opinion of the value as possible – and that is what I am getting paid for.As I assess the property, I will take a photo of every nuance that I want / need to remember. This will include any apparent damage, needed repairs or deferred maintenance. I will also take pictures of any positive features that I can use to help separate this home from the others.Interior PicturesWhen taking pictures for an Interior BPO, I always start with the front door open and then go in and take at least 3 pictures of every room – each from a different corner. As mentioned earlier, I will document any damage or deferred maintenance.. I will also take pictures of all upgrades.I walk the house, room by room so I can keep everything straight. Lets say it is a 5 bedroom home, I definitely want to make sure that I document each room with the right pictures. That may be easy when every room is painted a different color, but when they are all white, be careful. The way I do this is I always start with a picture from the bedroom door, then one from across the room looking towards the entrance followed by a 3rd with a picture of the closet (half open so I can see the inside). Any damage would be taken between the first pictured and the closet picture. Then I am ready for the next room.COMPSMore often than not, I like to do my research prior to going out and taking a look at the subject. First, I check my local Title website and pull all of the property characteristics and enter them into the BPO form. Once I know what the subject looks like on paper, I will search the MLS for comps as close as possible to the subject.There are times when I can find all of my cops in the same tract – but most of the time I have to expand my search. It is very important that you fully understand the criteria each company will tolerate. I have clients that will allow me 25% variance in the square footage and others that insist I remain within 10%.Suburban BPO’s generally allow for a one mile radius of where the comps can come from. 90% of my market is suburban – the remaining is rural where I can go 10 miles out. I have not lived in an urban area since 1992 – so check with your client if this is your market.Bedroom and bath room count is usually within tolerance of plus or minus one – but there are times when you just need to expand outside this and other criteria. Consult with your Asset Manager and seek their guidance on how they would like you to proceed. The important thing is that you completely document any variance you make. Let me take this back, the CRITICAL thing that you do is document any variance and the reason why you selected this comp.Remember, for every BPO you do, one of your peers is doing the exact same report and chances are you will never learn who it is – but the lender knows who to give the work to in the future if you mess this up.NEIGHBORHOODAll BPO’s require you to document the positive and negative aspects of the neighborhood the subject is in. Not only the neighborhood, but how about the next door neighbor. I just did a BPO where there was a RV parked right next to the property line and the subject driveway, making it impossible for a car to back out of the garage and driveway and see if anyone is coming from that direction. Well, that’s just one of the subtle little details that can make a difference and account for an adjustment in value.Is the neighborhood close to schools? Shopping? Entertainment? Commuter routes? Restaurants? Parks? Places of worship?...or is it in a secluded upscale neighborhood that residents don’t mind driving an extra couple of mile to get where they want to be?Are there negative or obsolete features? Are there overhead electrical lines? Is there a flood channel? A large vacant field that may attract rodents? How close is it to a landfill? Is there a prison at the end of the street?You get the idea – tell it like it is – Good, Bad or just downright Ugly!MARKET CONDITIONSWhen it is all said and done, you must analyze your data as you client will and offer your opinion of the value. Different clients will want different values. I created an excel spreadsheet where I can plug in the variables in a grid format and make adjustments with a variable number that I can change from report to report.When I’m finished with the BPO, I have just recently started saving a copy of the worksheet. I save it to the folder I created in ‘My Pictures’ for the BPO. This allows me to keep all of my info for each BPO in one location, even though this is not a picture.I do save all of my pictures – not sure why, other than I have a massive hard drive and I might as well use it for something. Truth is I have done a BPO for the same property – a year and a half later. This allowed me to go back and see the transition of the property – not that this is relevant for my BPO at hand, but for my market knowledge, which is why I am an expert in my local real estate market.The basic value the Asset Manager is typically looking for in a BPO is the current AS-IS Value and a REPAIRED VALUE. They many want to know what these values would be with a 30 day window to sell as well as a 30 to 90 day window and perhaps even a 90+ window.There are times when I am not comfortable with he results, based on the overall market. Here in my market, we have 2 cities, an area of unincorporated county - all in 5 zip codes with about 100,000 residents. We are isolated, so yes there are nuances between each zip code and area of the valley, it is still one market.I will use this opportunity to offer market data outside of the 1 mile radius the report is based on. For example, I may have a 4 bedroom 2500 sq ft home built in 2003. The comps may have come from across the mile radius and not the same tract. The data may tell me this home should sell for $180,000…but I am just not comfortable with that number so I’ll run the numbers valley wide and let the asset manager know that there are 45 (or however many) homes that are both newer and larger than the subject and priced between $150K and $180K – letting them know that the competition is not from the 1 mile radius, but from across the valley..FINAL DETAILSIn parting, I would need to offer this last little bit of advise if you are going to be successful with your BPO’s and ultimately your REO’s.TIME is of the ESSENCE!As REALTORS® we have been taught that time is always of the essence and believe me when I tell you, it is no more so than when working with Asset Managers who are often from different states and time zones. They are under a lot of pressure to get their job done and their performance is based on your performance.So, never ever run late – get the job done and get it done early. Most BPO’s are due in 72 hours – my goal is always 48. This is true when you are listing REO properties as well – everything is task oriented and time lines are critical – this is how you will build your business and your reputation in the REO world.John Occhi, REO REALTOR®Century 21 Crest – CrestREOJohn Occhi is a REO REALTOR® thatspecializes in the sale of bankowned homes in the Inland Empireregion of Southern California. Hehas helped many buyers acquiregreat deals on these REO homes.His company, CrestREO, the REODivision of Century 21 Crest – the77th largest C21 in the Nation, hasSold Over $1Billion in REO Sales.

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